Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on March 16, 2018

KUALA LUMPUR: Malaysia’s unemployment rate rose 0.1% month-on-month (m-o-m) to 3.4% in January, marking its first m-o-m increase in three months, according to data published by the Department of Statistics yesterday.

But on a year-on-year (y-o-y) basis, the unemployment rate retreated 0.1% from January 2017. It is also the fifth consecutive month of y-o-y contraction.

Describing the prevailing unemployment rate as “healthy”, MIDF Research pointed to growth in labour force and employment rate, both of which have outpaced unemployment growth for the eleventh month since March 2017.

This was after taking into account that y-o-y growth for both the labour force and employment slowed to 2.1% in January 2018, from 2.4% and 2.5%, respectively, in December 2017.

“Employment grew at a steady pace,” said MIDF Research in a note yesterday. “During the month of January, jobs added [to] the economy registered at 30,400, marginally higher than 2017’s monthly average of 30,300,” it added.

MIDF said the better employment numbers were supported by upbeat momentum in external trade and industrial activities. It expects Malaysia’s external trade and industrial production index (IPI) to continue to expand at a solid pace this year, amid upbeat global economic and gradual recovery in commodity prices.

“Consequently, the continuous momentum in industrial activities will translate into an increase in jobs added, stable wage growth, and indirectly provide additional support [to] Malaysia’s domestic demand in 2018,” it said.

The manufacturing sector is among the biggest beneficiaries of growing exports, and a 2.5% y-o-y increase in employment rate in the manufacturing sector in January resulted in a spillover effect where wage growth jumped 13.3% on-year that same month, MIDF said.

“In fact, the wage growth of the [manufacturing] sector registered the highest ever record during the month,” it said. Employment growth in the sector was supported largely by sub-sectors such as basic iron and steel products, electrical capacitor resistor and components, and refined petroleum products.

“We predict petroleum-related and export-oriented sectors will stay on upward trajectories due to steady upbeat momentum in global trade activities and gradual recovery in crude oil prices,” it added.

Overall, MIDF sees domestic economic activities staying on an upward trajectory, “given that business confidence remains optimistic for the first six months of 2018”, as guided by the recent Business Tendency Index.

“In addition, we noticed global indicators from developed and emerging economies are still signalling positive cues that global demand will remain on the high side.

“We forecast Malaysia’s job market [will] continue benefiting from robust global trade activities and the gradual recovery in commodity prices, especially in export-reliant and commodity-oriented industries,” it added.

 

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